Island enraged by casino backflip

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For months, Federal Government minister Ian Campbell was promoting the reopening of a casino on remote Christmas Island.

The Howard Government's minister for territories even urged Immigration Minister Amanda Vanstone to allow Asian gamblers to visit the island without having to obtain a visa.

"The reopening of the casino would strengthen the local tourism market and be a major contributor to local economic activity," he told her in a letter on April 5, a copy of which has been obtained by The Age.

But on July 16, Senator Campbell's last day as minister for territories before being sworn in as Environment Minister, he announced a decision that enraged the island's 1200 people and has thrown their economic future into doubt.

"In the interests of the Christmas Island community, the Australian Government has decided to make legislative changes to prohibit casino operations on Christmas Island," Senator Campbell said.

By the time NSW MP Jim Lloyd replaced Senator Campbell last week, Christmas Island, a rocky outcrop 2630 kilometres north-west of Perth, was in revolt.

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Ed Turner, a prominent businessman, described the decision as the "final kick in the guts".

"A large, reputable Asian company intended to create 300 to 400 jobs and spend millions of dollars - these people were misled in a despicable way that will destroy this island on a long-term basis," he said.

Almost every adult on the island has signed a petition calling on the Government to reverse the decision.

Three days after Senator Campbell's announcement, representatives of a Perth-registered consortium of South Korean investors, KFL Star Resort Pty Ltd, told officials in Canberra they would now walk away from a plan to spend $30 million refurbishing the island's cliff-top casino complex and resort hotel. The consortium said it would drop plans to spend tens of millions more building a golf course and residential complex and promoting the island in Asia.

Island business people are furious that Senator Campbell failed to consult them.

The decision also prompted the closure of the island's only air link to Asia - regular charter flights from Bali - that bring in fresh food and crucial supplies like machinery parts.

Island business people are furious that Senator Campbell failed to consult them about the decision, which he justified by claiming that gambling would have a social impact the island.

They say there is already gambling on the island and the casino did not have any adverse impact before it closed in 1998 when its former owner was forced into bankruptcy.

Graeme Hallett, a spokesman for Mr Lloyd, at first said the decision was taken by cabinet with "obviously quite a bit of weight from the Prime Minister".

But Mr Hallett later said: "Apparently it wasn't discussed in cabinet, it was discussed among senior ministers, including minister Campbell."